GFI\u2019s President and CEO Tom Cardamone<\/strong> said that \u201cduring a time when developing countries are scrambling for every penny to fund vaccines and medicines to fight COVID-19 infections, billions of dollars in duties and taxes are going uncollected. It is absolutely shocking,\u201d he continued, \u201chow few governments are paying any attention to these massive losses.\u201d<\/p>\n\n\n\nTrade misinvoicing occurs when importers and exporters deliberately falsify the declared value of goods on invoices submitted to customs authorities. This allows traders to illegally move money across international borders, evade tax and\/or customs duties, launder the proceeds of criminal activity, circumvent currency controls, and hide profits in offshore bank accounts.<\/p>\n\n\n\n
Value gaps, or mismatches in international trade transactions, indicate that developing countries are not collecting the correct amount of trade-related taxes and duties that are owed, leading to potentially massive amounts of revenue losses. While these value gaps are only estimates of misinvoicing, they indicate the scale of the problem. <\/p>\n\n\n\n
In order to identify potential trade misinvoicing, GFI examined official trade data reported to the United Nations to identify value gaps, or mismatches, in the data regarding what any two countries reported about their trade with one another. While there are reasons for some mismatches to regularly show up in the international trade data, GFI believes that the majority of the gaps identified are indicative of trade misinvoicing activity. GFI looked at all bilateral trade data for 134 developing countries, as well as trade between those countries and 36 advanced economies.<\/p>\n\n\n\n
Key Findings<\/strong><\/p>\n\n\n\n- US$1.6 trillion value gap identified in trade between 134 developing countries and all of their global trading partners in 2018;<\/li>
- US$835.0 billion value gap identified in trade between 134 developing countries and a set of 36 advanced economies in 2018;<\/li>
- The developing countries with the largest value gaps identified in trade with 36 advanced economies in 2018 are China (US$305.0 billion), Poland (US$62.3 billion), India (US$38.9 billion), Russia (US$32.6 billion) and Malaysia (US$30.7 billion);<\/li>
- The developing countries with the largest value gaps identified in trade with 36 advanced economies in 2018 as a percent of total trade are The Gambia (45.0%), Malawi (36.6%), Suriname (31.9%), Kyrgyzstan (30.6%) and Belize (29.2%).<\/li><\/ul>\n\n\n\n
Key Recommendations<\/strong>
At the national level, countries should:<\/p>\n\n\n\n