Global Financial Integrity (GFI) has published a comprehensive study estimating the amount of revenue losses Egypt 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 that through trade misinvoicing in 2016 Egypt lost approximately US$1.6 billion.
GFI estimated that the value of the trade gap for misinvoiced goods in Egypt was roughly US$8.5 billion, or 10.5 per cent of its total trade of US$80.6 billion in 2016.
This meant Egypt missed out on rightful revenues from taxes, customs duties and royalties of US$1.6 billion, or 4.1 per cent of the country’s total government revenue collections in 2016.
Goods and locations
GFI examined standard product codes to determine what types of goods were most frequently misinvoiced and from which countries they originated.
Egyptian imports most at risk for high values of import under-invoicing were essential oils, vehicles, machinery and meats.
Countries with the highest values of import under-invoicing were Ireland, China and Switzerland.
GFI concluded its report by recommending both national and international policy initiatives the Egyptian government can take to curtail IFFs and regain revenue lost to trade misinvoicing.
Egypt could increase penalties for customs fraud, expand customs resources, consider making its existing beneficial ownership legislation part of its customs law and adopt and fully enforce Financial Action Task Force anti-money laundering (AML) recommendations and existing AML legislation.
Categories: Trade Based Financial crimes News