Global Financial Integrity (GFI) has published a comprehensive study estimating the amount of revenue losses Indonesia incurred as a result of trade misinvoicing in 2016.

The non-governmental organisation (NGO) that lobbies for action against illicit financial flows (IFFs) analysed data published on the United Nations’ Comtrade database, and estimates Indonesia lost approximately US$6.5 billion to trade misinvoicing in 2016.

Methodology

GFI estimates that the value of misinvoiced Indonesian goods equals US$38.5 billion, equivalent to 13.7 percent of Indonesia’s total trade in 2016  of US$ 280.2 billion.

To estimate revenue losses, GFI applied the existing VAT taxes, customs duties, royalties and company income taxes to the instances where misinvoicing occurred.

This resulted in estimated revenue losses to the Indonesian government of approximately US$6.5 billion.

Goods at risk

The Washington-based NGO also examined harmonised product codes to determine which goods were the most frequently misinvoiced and which countries they came from.

GFI found that essential oils from Singapore, plastics from China and vehicles from both Japan and China were the goods at the greatest risk for trade misinvoicing for 2016.

GFI’s report, Indonesia: Potential Revenue Losses Associated with Trade Misinvoicing, can be found here.

Categories: Trade Based Financial crimes News