Bangladesh lost Tk71,000cr to trade misinvoicing a year

Bangladesh lost a whopping $8,275 million or Tk71,000 crore on an average between 2009 and 2018 to trade misinvoicing, equivalent to more than one-fifth of the country's tax collection target for the current fiscal year, says a report by a US-based think-tank Global Financial Integrity (GFI).

The estimated losses accounted for 17.3% of Bangladesh's international trade with all trading partners during the same period, according to the report titled "Trade-Related Illicit Financial Flows in 134 Developing Countries 2009-2018" released on Thursday. 

The latest data available for Bangladesh was for 2015 when the country lost $11,871 million. There was no such data for 2014, 2016, 2017 and 2018, the report said.

In a respond (On 21 Dec) to TBS query, Lauren Anikis, communications coordinator of Global Financial Integrity (GFI), said, "Unfortunately Bangladesh did not report its trade data to the UN for those years. We can only work with the data each country provides to the UN."

Trade misinvoicing occurs when importers and exporters deliberately falsify the declared value of goods on invoices submitted to customs authorities.

To identify potential trade misinvoicing, GFI examined official trade data reported to the United Nations to identify mismatches, in the data regarding what any two countries reported about their trade with one another.

The GFI report finds an estimated $1.6 trillion in potential trade misinvoicing among 134 developing countries, of which $835 billion occurred between developing countries and 36 advanced economies in 2018.

In terms of averages over the ten-year period, China topped the list with $445.3 billion a year, followed by India $67.5 billion, Russia $63.7 billion, Poland $61.1 billion and Malaysia $60.8 billion. 

Bangladesh had the third-largest average value gaps or mismatches in international trade transactions – only estimates of misinvoicing – among the eight South Asian nations.

India led the list among eight South Asian nations, followed by Pakistan with $8.54 billion, Bangladesh $8.28 billion, Sri Lanka $4.09 billion and Nepal $1.02 billion.

Other south Asian countries including Maldives, Afghanistan and Bhutan lost less than $1 billion per year during the reported period.

Moreover, Bangladesh's loss to trade misinvoicing with the 36 advanced economies averaged $3,568 billion during the decade, which is 14.3% of the country's international trade.

GFI's President and CEO Tom Cardamone said, "During a time when developing countries are scrambling for every penny to fund vaccines and medicines to fight Covid-19 infections, billions of dollars in duties and taxes are going uncollected. It is absolutely shocking."

"How few governments are paying any attention to these massive losses," he added,

The report said at the national level, countries should make trade misinvoicing illegal, strengthen law enforcement capacities of customs authorities, establish multi-agency teams to address customs fraud, tax evasion and other financial crimes, implement readily available trade misinvoicing risk assessment tools and strengthen customs oversight of Free Trade Zones.