▣ DATA BRIEF · INTERNATIONAL TAXATION
☀ Key Stats
◆ Cross-country estimates cited by the World Bank put tax-revenue losses from multinational base erosion and profit shifting at an average 2.5% of GDP in low-income countries.
◆ The comparable estimate for lower-middle-income countries is 1.5% of GDP.
◆ An estimated $1 trillion in multinational profits was shifted to low-tax jurisdictions in 2019.
◆ That was equivalent to about 37% of global multinational profits and an estimated loss of roughly 10% of corporate tax revenue worldwide.
◆ Multinationals account for around 16%–20% of corporate income-tax revenue in low- and lower-middle-income economies, increasing the fiscal importance of taxing them effectively.
◆ In South Africa, the 10 largest foreign-owned firms accounted for half of estimated shifted profits in research cited by the report.
◆ Developing economies received information on 33 million foreign financial accounts worth $3 trillion through automatic international information exchange in 2022.
◆ Tax authorities in those economies were able to match only about 60% of the accounts to taxpayers.
◆ Separate tax breaks and exemptions cost developing economies roughly one-fifth to one-quarter of their tax collections, adding another source of revenue loss.
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Low-income countries lose tax revenue equivalent to an estimated 2.5% of GDP each year to multinational base erosion and profit shifting, according to evidence summarized in a new World Bank report.
The comparable loss for lower-middle-income economies is estimated at 1.5% of GDP, highlighting how cross-border corporate taxation can weigh more heavily on countries with the least fiscal room.
The World Bank says multinational companies can shift profits from higher-tax countries to lower-tax jurisdictions through transfer pricing, financing arrangements between related companies and the location of intangible assets such as intellectual property.
The report argues that better international transparency could help developing-country tax authorities capture more of the revenue already legally within reach rather than relying primarily on higher headline tax rates.
◎ HEADLINE ESTIMATE
2.5% of GDP
Average estimated corporate tax-revenue loss from base erosion and profit shifting in low-income countries.
The estimated loss is larger in poorer economies
The World Bank report cites cross-country research estimating losses from base erosion and profit shifting at 2.5% of GDP for low-income countries and 1.5% for lower-middle-income countries.
That comparison is particularly important because corporate income taxes are a meaningful source of government revenue in developing economies.
2.5%
GDP-equivalent tax loss
Low-income countries
1.5%
GDP-equivalent tax loss
Lower-middle-income countries
Large multinationals account for around 16% to 20% of total corporate income-tax revenue in low- and lower-middle-income economies, according to country-by-country reporting data analyzed in the report.
That makes the location of multinational profits especially important for government budgets in countries where overall tax collection is already low.
↳ GLOBAL SCALE · WHERE PROFITS ARE BOOKED
$1 trillion in multinational profits was shifted in 2019
The problem extends far beyond low-income countries.
Research summarized by the World Bank estimates that multinational companies shifted about $1 trillion in profits to low-tax jurisdictions in 2019.
↗ GLOBAL PROFIT SHIFTING · 2019 ESTIMATE
$1 trillion in profits shifted
37% of global multinational profits
~10% of global corporate tax revenue lost
The shifted total represented an estimated 37% of global multinational profits and reduced worldwide corporate income-tax revenue by approximately 10%.
The figures refer to 2019 and should not be read as estimates for 2026.
A small number of companies can account for much of the loss
Profit shifting is also highly concentrated among the largest multinational companies.
In South Africa, research cited by the report found that the 10 largest foreign-owned companies accounted for half of the total estimated profits shifted.
That concentration matters for tax administration because monitoring a relatively small number of very large corporate groups can potentially cover a large share of the multinational tax base.
It also helps explain why the World Bank emphasizes specialized large-taxpayer units, international information exchange and access to multinational company data.
What profit shifting means: Multinational groups can report profits in jurisdictions different from where much of their economic activity takes place. Techniques can include transfer pricing, internal loans and placing intellectual property in lower-tax locations.
International reporting is making more multinational activity visible
The World Bank places transparency at the center of its proposed response to cross-border tax avoidance.
Country-by-country reporting now requires the largest multinational groups to disclose where they record profits, sales, employees and taxes, giving authorities more information about where economic activity and taxable profits are located.
The reporting requirement applies to multinational groups with global revenue of at least €750 million, a group that accounts for about 90% of global multinational profits according to evidence cited in the report.
The broader international effort is part of what the OECD describes as action against base erosion and profit shifting.
The World Bank argues that better information can weaken one of the advantages previously enjoyed by highly mobile profits: tax authorities often could not see where income and ownership ultimately ended up.
↳ TRANSPARENCY · OFFSHORE FINANCIAL ACCOUNTS
Developing economies received data on $3 trillion in foreign accounts
Corporate profit shifting and offshore household wealth are different tax problems, but both illustrate the importance of cross-border transparency.
In 2022, emerging and developing economies received information on 33 million foreign financial accounts worth $3 trillion through automatic exchange arrangements.
33M
Foreign financial accounts
reported to developing economies
$3T
Value of reported
financial accounts
The problem is increasingly not only obtaining the data but being able to use it.
The report says developing-country administrations could match only about 60% of those accounts to taxpayers, limiting the information’s usefulness for enforcement.
Voluntary disclosure programs associated with the broader international transparency push have recovered around $40 billion in additional tax revenue across emerging and developing economies over the past decade.
Argentina shows how transparency can translate into revenue
Argentina provides one of the report’s clearest examples, although it concerns hidden personal wealth rather than multinational corporate profit shifting.
A 2016 voluntary disclosure program led taxpayers to reveal previously undeclared assets worth 21% of GDP.
About 255,000 people participated, and 80% of the assets disclosed were held abroad.
Penalties generated revenue equivalent to 1.8% of GDP, while wealth-tax revenues subsequently doubled.
The example illustrates the report’s broader argument that better visibility can turn income and wealth previously beyond the tax authority’s reach into an enforceable tax base.
Profit shifting is only one source of lost tax revenue
Developing-country governments also give up substantial revenue through domestic tax exemptions, credits, reduced rates and other preferences.
The World Bank estimates those tax expenditures amount to roughly one-fifth to one-quarter of tax collections across developing economies.
Consumption-tax preferences alone account for roughly 16% to 18% of tax revenue in emerging and developing economies.
The report does not argue that all of that money could be recovered simply by abolishing every exemption, because changing tax rules can also change investment, consumption and taxpayer behavior.
Tax revenues have barely risen relative to GDP since 2010
The losses arrive against a difficult fiscal backdrop.
Tax revenue has remained around 10% of GDP in low-income countries since 2010, compared with about 13% in lower-middle-income countries and 19% in upper-middle-income economies.
At the same time, developing economies face higher debt costs and weaker foreign assistance.
StatsJournalist recently reported that health aid fell by an estimated $4.2 billion in 2025 as broader international assistance contracted sharply.
That combination increases the importance of revenue governments can raise domestically without placing additional burdens on households that are already vulnerable.
✦ Why it matters ✦
A tax-revenue loss equivalent to 2.5% of GDP is particularly consequential in countries where governments collect only about 10% of GDP in taxes overall.
The two figures are not directly additive or drawn from the same methodology, but together they illustrate the scale of the fiscal challenge.
Revenue lost through multinational profit shifting cannot finance health services, schools, infrastructure or debt payments in the country where the taxable activity occurred.
Replacing that money through broader consumption taxes can also impose costs on households, particularly when poorer families spend a larger share of their income on taxable goods.
The World Bank therefore argues that making multinational profits more visible and reducing opportunities to move taxable income across borders can be part of a broader strategy to raise revenue more efficiently and fairly.
That approach complements earlier StatsJournalist coverage showing substantial gaps between actual and potential tax collection in East Asian economies.
ⓘ How to read the findings
The source is the World Bank Policy Research Report Raising Revenue Right: A Roadmap for Domestic Resource Mobilization. The report combines original World Bank analysis with findings from previously published studies, administrative data and international databases.
The headline 2.5% of GDP figure is not a new 2026 World Bank estimate. It comes from cross-country research on base erosion and profit shifting cited by the report and represents an average estimated revenue loss for low-income countries.
The comparable estimate is 1.5% of GDP for lower-middle-income countries. Individual countries may experience substantially different losses.
Base erosion and profit shifting covers strategies that reduce the taxable corporate base or move profits across jurisdictions. The estimate should not be interpreted as saying that 2.5% of each low-income country’s entire GDP is physically transferred abroad.
The $1 trillion and 37% figures refer to an estimate for multinational profits shifted in 2019. They are evidence cited by the World Bank rather than a measurement of profit shifting in 2026.
Profit shifting can involve legal tax planning as well as arrangements that may cross legal boundaries. The article therefore avoids treating every shifted dollar as proven criminal tax evasion.
The estimate that multinationals provide 16%–20% of corporate tax revenue in low- and lower-middle-income economies comes from aggregated country-by-country reporting data for 2021.
The 33 million accounts worth $3 trillion relate to offshore financial-account transparency, which concerns household and individual financial wealth as well as tax enforcement. That is a separate issue from multinational corporate profit shifting and is included as evidence on tax authorities’ growing access to cross-border information.
The World Bank reports that only around 60% of those foreign accounts could be matched with taxpayers, illustrating that receiving data does not automatically translate into additional tax collection.
Argentina’s disclosure program concerns previously hidden private assets rather than corporate profit shifting. Its 21%-of-GDP disclosure and 1.8%-of-GDP penalty revenue should therefore be treated as a separate example of what greater offshore transparency can uncover.
The uploaded PDF is marked “Advance Edition: Not for Citation.” The World Bank has since published an official report landing page, which should be used as the public-facing primary source.
