GRADE Simulations
The impact of profit shifting on children’s rights
The Government Revenue and Development Estimations (GRADE) models the foreseeable impact on children’s rights of revenue lost when there is profit shifting. Profit-shifting estimates are from the Atlas of the Offshore World (International Tax Observatory & Skatteforsk — Norwegian Centre for Tax Research).
Background
To ensure that every child has access to their rights, financing is critical, and governments are obligated to use their maximum available resources. However, some governments cannot use maximum available resources owing to cross-border constraints, see Figure 1 for a schematic representation.
Under international human rights law, states bear extraterritorial obligations to avoid reducing the maximum available resources that governments can deploy to fulfil child rights under the United Nations Convention on the Rights of the Child.
Figure 1. Cross-border constraints on maximum available resources for children's rights. This tool focuses on the highlighted pathway: tax havens and secrecy jurisdictions → profit shifting and tax evasion → reduction in maximum available resources.
Methods
Profit-shifting estimates for 154 countries from the Atlas of the Offshore World were input into GRADE; any child rights outcome data were available for 150 of these countries. Below we see the modelled estimates if governments had additional government revenue equivalent to lost tax revenue from corporate profit shifting. Data were available 2015–2021.
Findings
Outcomes: These are the additional child rights gains if countries had additional revenue equivalent to the tax revenue lost to profit shifting. Outcomes are child-rights-specific indicators across four domains: child survival and health, education, basic services (water, sanitation, electricity, clean fuels), and social security. Cumulative outcome figures are only computed for flow variables (deaths averted, additional child school years) which can be summed across years. For stock variables (e.g. the numbers accessing basic water) we report the value in the latest year (2021), the same person is counted only once.
At the country level results, the “% of those without” indicators show the share of the unmet need in each country in 2021.
Attribution: We assume a proportional relationship between facilitation of cross-border profit shifting and responsibility for the resulting deprivation of children’s rights in another.
Time frame: Allows the selection of a single year, or “2015–2021” for the full cumulative window. Tap any bar in the chart, map, or country in the sortable table — to see that country’s full profile. Country profiles include a copy-link button, and a PDF brief.
Income group: Allows selection of all income groups or one of the four World Bank Income groups.
Key takeaways
- Loading...