Despite having a population under 30,000, the British Virgin Islands (BVI) attracted more foreign investment in 2013 than the world’s two largest emerging economies—Brazil and India—according to a UN survey.

The islands house some of the better-known corporate tax shelters where transnational corporations secret their profits in order to avoid steeper taxes in the nations where they operate. The ethics of such tax loopholes aside, the archipelago benefitted from $92 billion in outside money last year. To put that number in perspective, the U.S. (as the world’s largest economy) received $159 billion in foreign investment.

However, it is somewhat deceptive to suggest that these investments are 100% comparable. Ultimately, the money that moves through the BVI isn’t going there for development or industry, but simply for the purposes of treasury.

An organization known as Tax Justice USA reports $150 billion in tax revenue is lost each year in the U.S. as a result of international corporations using tax havens like the BVI. However, money is not just leaving the developed world. Tax Justice cites a report that shows from 2000-2008, $810 billion of what it calls “illicit money” left the developing world on an annual basis.

The designation as “illicit” refers to money that leaves its country of origin without record and through legally questionable means. These funds are then funneled into tax havens, creating a leaching effect on development and aid resources.

As it pertains to the U.S., the loss in revenue is not on any parties’ political agenda despite the fact that nearly every major American corporation makes use of states like the BVI including the tech giants Apple and Microsoft.

In the U.S. Senator Bernie Sanders (I-VT) is essentially the lone voice in the fight for fairness in corporate taxation. In February of 2013 he introduced a bill to the Senate called the “Corporate Tax Dodging Prevention Act” that would prohibit the use of offshore tax havens.

According to Sanders, “You can’t be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people.”

As of early 2014 the bill is still in committee.

Although lost tax revenue is a frustrating loss for the developed world, the consequences in the developing world are much more dramatic. It’s hard not to imagine, for instance, the positive impact $92 billion dollars (the amount received by the BVI) would have in real terms on poverty in the developing world.

In Brazil, nearly 9% of the population lives on less $1.30 per day. In India, 33% of the population lives below the poverty line. In these the largest of the emerging economies this sort of outside investment could potentially lift millions out of poverty if the funds were applied to improving healthcare and education.

Without any comprehensive change on the horizon, there still remains some hope that tax reform may be on the way. The UN report has raised a few eyebrows in developed nations (like those Senator Bernie Sanders), and the increased awareness along with the UN’s recommendations might lead to an international agreement on this issue.

– Chase Colton

Sources: UNICEF, Huffington Post, The Rio Times, Business Insider, Global Financial Integrity , Tax Justice USA, Reuters
Photo: Top-10-List