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European Union member states lose 170 billion euros (£143 billion) a year due to tax avoidance and evasion, a Polish state think tank said in a report due to be discussed later on Wednesday at the World Economic Forum annual meeting in Davos.

The report, from the Polish Economic Institute, also proposed that the European Commission should have powers to sanction as “EU tax havens” countries that benefited from what it called artificial profit-shifting by companies.

“Losses resulting from the use of international transactions for tax fraud and tax avoidance reduce EU Member States’ revenues by around 170 billion euros annually,” Piotr Arak, the director of the Polish Economic Institute, said in a statement.

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“The Union should take integrated measures to seal the tax system in order to have an additional source of financing for the new budget, to be constructed without the United Kingdom, a major payer,” the institute said.

The report is to be discussed on Wednesday evening in Davos, with speakers including Polish Prime Minister Mateusz Morawiecki and French Finance Minister Bruno Le Maire.

The broader issue of tax has been high on the agenda at Davos, with a battle brewing between the United States and Europe over how the world’s biggest technology firms are taxed.

Out of 170 billion euros the EU loses every year 60 billion euros comes from artificial profit-shifting by multinational companies - moving earnings from a higher tax jurisdiction to a country with a lower tax rate - 46 billion euros due to moving wealth by rich individuals, and 64 billion euros due to cross-border VAT fraud, the institute said.

The countries worst-hit by losses due to artificial profit shifting were: Germany (18 billion euros), Britain (14 billion), and France (11 billion), it said.

“Some EU Member States benefit from the artificial profit shifting process and should be called EU tax havens,” the report added. “These are: the Netherlands, Ireland, Belgium, Luxemburg, Malta and Cyprus.”

Overall tax losses for EU countries over seven years add up to 1,190 billion euros, or a quarter more than the whole EU budget for 2014-2020 which amounts to 960 billion euros, the institute said.

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The Polish Economic Institute’s remit is to supply the government with analysis to support its development plans for the country. Since 2015 Poland has been ruled by the Law and Justice (PiS) party and remains at loggerheads with the EU over judiciary reforms, rule of law, environment and migration policy.

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