A couple of weeks ago UNCTAD published a study on illicit financial flows through trade misinvoicing which they said “revealed staggering revenue losses to developing countries”. It made the extraordinary claim that “virtually all gold exported by South Africa leaves the country unreported” and suggested this was explained by  massive smuggling. The South African authorities took these claims seriously and responded robustly. [I wrote about the study here and have tracked the responses to it here].

Yesterday they published a further statement ‘UNCTAD welcomes discussion, transparency on commodities and misinvoicing’. It is disappointing, as it simply repeats the basic misunderstanding which led to the wild claims (‘mismatches in the trade data = ‘misinvoicing’), while adding new layers of confusion. It is also a bit odd, as it does not acknowledge the responses to their central claim on South African gold -by the South African Revenue Service, the South African Statistician General or the Chamber of Mines.

The statement is quite long, and so this blog post is too, but it is worth being clear on this stuff. The text in red is UNCTAD’s statement. Continue reading ‘Trade misinvoicing: UNCTAD is still confused’


[Updated on August 2nd and 3rd, and August 16th – updates at the bottom]

This is an update post following my post of July 20th: Misinvoicing or Misunderstanding?

The story so far

On July 16 UNCTAD published a study on Trade Misinvoicing in Primary Commodities in Developing Countries with the headline “Some developing countries are losing 67% of commodity exports to misinvoicing”.

The study by Professor  Léonce Ndikumana, a leading expert on capital flight from Africa, looked at mismatches in the data from the UN COMTRADE database on exports of commodities such as cocoa, copper, gold, and oil from Chile, Cote d’Ivoire, Nigeria, South Africa, and Zambia. It was presented as revealing “staggering revenue losses to developing countries from commodity trade mispricing”, including  the explosive claim that between 2000 and 2014, $78.2 billion of gold – or 67% of overall gold exports were ‘misinvoiced’ (i.e. smuggled) out of  South Africa, and other claims such as that Zambian copper exported to Switzerland was going missing.

UNCTAD gave the study a lot of weight Dr.Mukhisa Kituyi Secretary General of UNCTAD said “This research provides new detail on the magnitude of this issue, made even worse by the fact that some developing countries depend on just a handful of commodities for their health and education budgets. Importing countries and companies, which want to protect their reputations, should get ahead of the transparency game and partner with us to further research these issues”. It was also highlighted by Deputy Secretary General Joakim Reiter in the closing statement to UNCTAD’s Global Commodities Forum.  Continue reading ‘The Great Gold Heist That Never Was’


This week a new study came out on Trade Misinvoicing in Primary Commodities in Developing Countries by Professor Léonce Ndikumana of the University of Massachusetts at Amherst, published by UNCTAD. It looks at the value of commodities such as copper, oil, gold, cocoa etc…exported from Chile, Cote d’Ivoire, Nigeria, South Africa and Zambia and compares this with the value of the same commodities imported into countries like the Netherlands, Switzerland, the UK and US.

Professor Ndikumana believes that mismatches in these records reveals systematic misinvoicing by mining, oil and commodity trading companies, and that it points to large-scale smuggling and tax evasion by major companies. As the FT reported “commodities from the developing world worth billions of dollars are being exported illicitly every year through misinvoicing”.

Continue reading ‘Misinvoicing or misunderstanding?’


Interviewees for jobs at Google are famously are asked fiendish questions like “how much does the Empire State Building weigh?” or “how many piano tuners are there in Chicago?”.[1]  The point of these ‘Fermi questions’ is not that there is a right answer, but that quick thinking applicants can combine the knowable (the population of Chicago), with the guessable (how prevalent is piano ownership? how often are they tuned?) and come up with plausible order-of-magnitude estimate.

The state of the art in estimating the cost of tax avoidance is somewhat similar. There are few known quantities, and the terms and concepts in the question are often vaguely specified. The impact of these numbers though, is more significant than a job interview brainteaser, as they shape the debate around how to strengthen and modernise international tax systems. All too often, even when carefully caveated, the numbers get picked up and used in ways that inflate their scale, and which allow rough guesstimates to be mistaken for empirical findings.

“€160-190 billion”…really?

In the run up to the final negotiation of the EU Anti-Tax Avoidance Directive last week the European Parliament put out a statement and infographic that Tax avoidance by companies cost EU countries €160-190 billion in lost revenue a year”.

Screen Shot 2016-06-22 at 13.18.21

The number is drawn from a research paper which was commissioned by the EU Parliamentary Research Services and written by Dr Robert Dover, Dr Benjamin Ferrett, Daniel Gravino, Professor Erik Jones and Silvia Merler. If you are interested in the issues the paper is worth reading in full. It also includes the data used in the calculations.

One thing you will notice (it is the first line of the abstract) is that the authors do not say that tax avoidance costs €160-190 billion at all. Their core estimate is €50-70 billion. They offer the €160-190 figure as an ‘overestimate’ based on a second, simpler methodology.

The explanation for these numbers on pages 13-16, although it is a little hard to understand. This blog post (which draws on discussions with the tax blogger Fairskat (Rasmus Corlin Christensen) and Iain Campbell of ARC, as well as with two of the authors Bob Dover and Erik Jones) is an attempt to clarify the basis for the two sets of estimates before the €160-190 figure passes into folklore.

Continue reading ‘Does corporate tax avoidance in Europe cost €160-190?’


Controversies about corporate ‘tax dodging’ tend to follow a common pattern. Critics expose the web of complex structures and opaque transactions used by a company and point to the advantageous tax result. It might be legal, they say, but it smells fishy.But one person’s egregious exploitation of loopholes, can be another’s innocuous interpretation of the rules. The people responsible for the company’s tax affairs tend to feel that they are being stung by an unfair and unwarranted attack based on misunderstanding and innuendo. They issue a terse statement along the lines of ‘we pay the right amount of tax according to the law’, and hope it all blows over.

we comply with all rules

The #taxmantra – @soongjohnston

But after the noise has died down we are left no clearer about what where the boundaries of responsible tax planning versus unacceptable avoidance might be.

This week, unusually, the NGO doing the criticizing was the free market Institute for Economic Affairs, and the Finance Director emerging blinking into the sunlight of unexpected public scrutiny was Oxfam’s Alison Hopkinson.

Richard Teather at the IEA called into question Oxfam’s use of tax planning via its trading arm Oxfam Activities Ltd and the way it uses the government’s gift aid scheme. “It is a strange philosophy that condemns actions in others whilst busily engaging in them oneself.”

Alison Hopkinson at Oxfam responded that “The IEA blog is a classic case of smoke and mirrors using partial information to make a case against Oxfam where none exists. The fact is that we are very careful to comply not just with the letter of the law on tax but also the intention behind it.“

You can simply pick sides based on where your sympathies lie (NB: my allegiances: I am both a shopper and donator at my local Oxfam store. I support Oxfam’s mission, but I wish they would get more serious in their tax advocacy).

However, I think the case raises interesting points which could push us to try to clarify thinking about the blurry zone between uncontroversial ‘good’ tax planning and bad/aggressive/immoral stuff, and the extent to which there could be more well-defined criteria for making the distinction (or can at least having a sensible discussion about it). Continue reading ‘Is Oxfam Avoiding Tax? (revised)’


I am delighted to welcome a guest post by Iain Campbell who is a member of the National Committee of the UK Association of Revenue and Customs (ARC). While I have  previously looked at the ‘big numbers’ that shape the debate on corporate tax avoidance, here Iain takes a close look at an estimate relating to offshore tax evasion by individuals:


Introduction

People who read Maya’s blog probably need no introduction to the name or work of Gabriel Zucman. He has been actively pursuing the issue of offshore wealth and associated tax losses over a number of years and publications, such as The Missing Wealth of Nations (2013),Taxing Across Borders (2014) and The Hidden Wealth of Nations (2015).

I am particularly interested, as an elected official for ARC, a trade union whose members are the senior professionals in HMRC. Our members are naturally interested in discussions of tax compliance and what more can be done to tackle evasion and avoidance, as well as how to measure the scale of the problem.

We should be grateful to Zucman for pushing debate along in this important area. He has published his papers alongside extensive technical appendices and details of sources and calculations, which aim to allow readers to check or reproduce his results. He has also responded in a positive way to some e-mail questions I have raised – but clearly he has not agreed with everything I have said.

Continue reading ‘$190bn and counting – measuring offshore tax losses’


The headline cases from the Panama Papers illustrate the problem of criminals, sanctions breakers, corrupt officials, tax evaders and fraudsters hiding their assets behind innocent sounding corporations and trusts. With a cache of 1.5 million documents, there are likely to be secrets that are still to be revealed, but already issues of corruption, fraud and theft of public assets are beginning to be conflated with broader debates on the way that international taxation is organised. This matters because different problems need different solutions. Continue reading ‘The Panama Filing Cabinets’




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