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Date: April 29, 2024 Mon
Time: 11:22 pm
Time: 11:22 pm
Results for trade
2 results foundAuthor: de Fontenay, Catherine Title: The Relocation of Crime Summary: We add a new sector called Crime to a traditional two-sector two-input Heckscher-Ohlin model of trade between countries. Trade is found to increase crime in the resource-rich country and to reduce crime in the resource-poor country by an equal amount. The negative externality from increased crime can be strong enough to cancel out the gains from trade for the resource-rich country. The paper also explores the impact of aid, capital flows, and migration on crime rates, and how crime shapes the degree of specialization in each economy. Details: Carlton, Australia: University of Melbourne, 2011. 36p. Source: Internet Resource: Accessed May 6, 2012 at http://works.bepress.com/cgi/viewcontent.cgi?article=1011&context=catherine_de_fontenay Year: 2011 Country: Australia URL: http://works.bepress.com/cgi/viewcontent.cgi?article=1011&context=catherine_de_fontenay Shelf Number: 125614 Keywords: Economics and CrimeTrade |
Author: Global Financial Integrity Title: Egypt: Potential Revenue Losses Associated with Trade Misinvoicing Summary: This report analyzes Egypt's bilateral trade statistics for 2016 (the most recent year for which sufficient data are available), as published by the United Nations (Comtrade). The detailed breakdown of bilateral Egyptian trade flows in Comtrade allowed for the computation of trade value gaps that are the basis for misinvoicing estimates. Import gaps represent the difference between the value of goods Egypt reports having imported from its partner countries and the corresponding export reports by Egypt's trade partners. Export gaps represent the difference in value between what Egypt reports as having exported and what its partners report as imported. In addition to identifying the trade gaps in Egypt's 2016 imports and exports with its partners, the report also estimated the potential loss of tax revenue associated with the gaps. The analysis shows that the estimated potential loss of revenue to the Egyptian government is approximately US$1.6 billion for 2016. To put this figure in context, this amount represents 4.1 percent of the value of Egypt's total government revenue collections in 2016. Put still another way, the estimated value gap of all misinvoiced imports and exports was US$8.5 billion, which is equivalent to 10.5 percent of the country's total trade of US$80.6 billion in 2016. The total estimated potential lost revenue of US$1.6 billion is comprised of misinvoiced imports and exports. The portion of government revenue potentially lost due to import misinvoicing in 2016 was approximately US$1.2 billion. This amount can be further divided into its component parts: uncollected valueadded tax (VAT) (US$410 million), uncollected customs duties (US$358 million) and uncollected corporate income tax (US$428 million). The potentially lost revenue due to misinvoiced exports in 2016 was approximately US$404 million. This amount can be further divided into its component parts:uncollected corporate income tax (US$181 million) and uncollected tax from royalty payments (US$223 million) (See Table 2). Trade misinvoicing occurs in four ways: under-invoicing of imports or exports, and over-invoicing of imports or exports. In the case of import under-invoicing, fewer VAT taxes and customs duties are collected due to the lower valuation of goods on the invoices. When import over-invoicing occurs (i.e. when companies pay more than would normally be expected for a product), corporate revenues are lower, making taxable income levels lower and consequently less income tax is paid. In cases of export under-invoicing, the exporting company collects less revenue than would be anticipated and therefore reports lower taxable income, subsequently paying less income tax. Total misinvoicing gaps related to imports in 2016 can be broken down by import under-invoicing (US$3.2 billion) and import over-invoicing (US$2.6 billion). These figures represent the estimated value of the gap between what was reported by Egypt and its trading partners. The estimated loss in government revenue is a subset of these amounts and is based on VAT tax rates in 2016 (13.0 percent), customs duties in 2016 (calculated by WITS tariff data on line by line basis) and corporate income taxes on profit in 2016 (16.3 percent), which are then applied to the value gap. Export misinvoicing gaps were US$1.1 billion for export under-invoicing and US$1.6 billion for export overinvoicing. Lost corporate income taxes in 2016 (16.3 percent) and royalties (20.0 percent) are then applied to export under-invoicing amounts to calculate lost government revenue (See Table 2). The study also includes a more in-depth exploration of the US$358 million in tax revenues from customs duties that Egypt is estimated to have been lost due to import under-invoicing in 2016 by examining imports according to major commodity groups as listed among the United Nations Harmonized System (HS) product codes at the two-digit level. We examined Egypt's imports to identify particular products that appeared to be at especially high risk for trade misinvoicing in 2016 (See Figure 2). We also examined Egypt's imports in 2016 to identify particular trading partners that appeared to be at high risk for trade misinvoicing both in terms of their percentage total imports to Egypt, as well as in terms of their dollar values of estimated lost customs revenues. The under-invoiced imports with the potentially highest risk for revenue losses by dollar values included essential oils (HS 33) at US$202.5 million, vehicles (HS 87) at US$21. 1 million, machinery (HS 84) at US$12.8 million and meats (HS 2) at US$12.3 million (See Figure 2). The partner countries associated with largest potential dollar values of losses included Ireland (US$145.6 million), China (US$85.4 million) and Switzerland (US$28.2 million) (See Figure 3). In terms of looking at both at high risk for revenue losses by both under-invoiced imports and trading partners, the analysis finds that essential oils (HS 33) from Ireland appears to have been particularly acute in 2016. Under-invoicing associated with imports of essential oils (HS 33) from both Switzerland and the Netherlands were also highlighted as a potential risk for revenue losses, as well as nearly half of all imports from China were potentially at risk for revenue losses (See Figure 4). We conclude by listing a series of steps that Egypt can take at the national and international level to address the problem of trade misinvoicing in particular and the problem of illicit financial flows (IFFs) more generally. GFI commends Egypt for becoming a member of the Middle East and North Africa Financial Action Task Force, a regional body of the Financial Action Task Force in May 2009 and for implementing country-by-country reporting in October 2018. On the issue of beneficial ownership (requiring the true owners of companies be identified), Egypt adopted its Anti-Money Laundering Law, or Law No. 80, in 2002, which addresses beneficial ownership. GFI recommends that Egypt consider making its beneficial ownership legislation part of its customs law as it would allow Egyptian Customs authorities to understand whether their borders are being used to facilitate illicit activity through trade and provide law enforcement authorities with a clear trail when pursuing investigations for customs fraud. On tax information exchange, Egypt joined the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) in 2016, but, as of November 2018, the Status of Commitments Report listed Egypt as among those "developing countries having not yet set the date" for the first automatic exchange of information (AEOI) with partner countries. GFI recommends that Egypt set a date for beginning AEOI and that Egypt should consider signing on to support the Addis Tax Initiative (ATI), a group of 55 countries committed to enhancing the mobilization and effective use of domestic revenues and to improving the fairness, transparency, efficiency and effectiveness of their tax systems. GFI also recommends that Egypt consider adopting its online tool - GFTrade - designed by GFI to build the capacity of customs authorities to better detect misinvoicing as transactions are occurring and take corrective steps in real time. At the international level, GFI recommends that Egypt use its diplomatic clout in the international arena to support a number of policy initiatives that require international cooperation to curtail IFFs. Of particular importance are international efforts to increase transparency in the global financial system, measures related to reducing the secrecy of tax havens and anonymous companies and efforts to curtail money laundering techniques. GFI recommends that Egypt and other world leaders take pro-active steps to support ongoing international efforts on these issues. Details: Washington, DC: Global Financial Integrity, 2019. 40p. Source: Internet Resource: Accessed July 19, 2019 at: https://secureservercdn.net/45.40.149.159/34n.8bd.myftpupload.com/wp-content/uploads/2019/06/Egypt-2019-1.pdf?time=1563471945 Year: 2019 Country: Egypt URL: https://gfintegrity.org/report/egypt-potential-revenue-losses-associated-with-trade-misinvoicing/ Shelf Number: 156916 Keywords: Customs Fraud Egypt Financial Crime Illicit Trade Misinvoicing Tax Fraud Trade |