Trade-based tax evasion and money laundering cost the US government more than US$640 billion in taxable income during 2021 according to a new report commissioned by Sēk Strategies, a Washington-based consultancy firm focused on transparency, accountability, human rights and the environment.
The report is based on in-depth data analysis of customs data that looked at every US trade transaction contained in the US department of commerce merchandise trade database and detected every abnormally priced import and export transaction.
Trade-Based Tax Evasion and Money Laundering cites a very wide range of apparently misinvoiced trades between parties in the US and many other countries. These include plastic buckets exported to the UK for a mere US$.01 while telephones imported from China for US$505 appear substantially overpriced.
Similarly, non-industrial diamonds appear to have been exported to France for US$2.32 per carat but imported from South Africa for US$929,391 per carat.
China tops list
The abnormal pricing of these goods by US companies or criminals illustrates complex tax avoidance or money laundering strategies that cost the US government more than US$640.36 billion in taxable income during 2021 the report concludes.
It says China tops the list of countries involved in the highest amount of estimated US tax losses and money laundering due to abnormal trade pricing in 2021.
The study was conducted by John Zdanowicz, professor emeritus of finance at Florida International University and president of International Trade Alert, which analyses US trade data and suspicious pricing in international trade.
Sometimes credited with coining the term trade-based money laundering (TBML), he has produced several reports on illicit trade flows, in 2018 releasing research that found tax evasion strategies in international trade have cost the US government more than US$3.1 trillion in taxable income.
The executive summary of the Trade-Based Tax Evasion and Money Laundering report can be viewed here.
Categories: Trade Based Financial crimes News