Capital flight from Africa and the tax-evasion industry

BoekWorc is preparing a discussion on illicit financial flows from Africa, based on three papers:

• “Business among friends”, an Oxfam paper published in 2014, argues for implementation and improvements of the OECD action plan on base erosion and profit sharing. Kofi Annan said in 2013 :”Africa loses twice as much money through tax loopholes as it gets from donors”. The paper indicates how money flows out through transfer pricing in Bangladesh and Peru. It shows the effect of the VAT exemption in Niger. It states that “The interminable pursuit of short-term profit maximization through corporate tax dodging is now an integral component of companies’ growth and profit strategies. Although such practices are highly questionable from an ethical standpoint, they are often not illegal”.  
• “Illicit financial flows from Africa”, a paper by the Global Financial Integrity group, estimates the huge burden of illicit earned money, stolen assets, trade misinvoicing and drug money that leaves Africa. Similar findings are published in the book “Capital flight from Africa” by Ajayi and Ndikumana (Oxford, 2015). Strategies to address the problem of capital flight are included. 
• “Tax us if you can” by the Tax Justice Network discusses the activities of the tax avoidance industry. It analyses the behaviour of tax administrations and the behaviour of the main players in the tax avoidance game: lawyers, accountants, secrecy jurisdictions, banks. Management fees are discussed. The behaviour of SAB Miller, the multinational brewer, is especially analysed. The paper pleads for tax assistance to very poor countries. 

 Blogpost by Karel van Hoestenberghe