While countries in the Global South have increased their tax revenues in the last decades, overall revenues remain low compared to advanced economies both in absolute and relative terms. This is a key challenge to development, as provision of crucial public services, such as education, healthcare, and infrastructure, rely on states having money to spend.
This project seeks to address the challenge of illicit financial flows by investigating the magnitude of these flows, the channels through which they flow, and the policy responses that may dampen the flows. The aim is to provide knowledge for the governments of developing countries that supports policies which will increase the revenue collection.
The project will mobilize high-profile academics in the field to discuss knowledge gaps and to set direction for future research. Key outputs will include 16 research papers, as well as recommendations for international organizations and selected individual countries based on the insights generated by the research papers.
As part of the project, we bring together an informal network of leading international researchers working on the topic of international tax and illicit financial flows.
All papers, events, briefs, blog posts, and opportunities to engage relating to the project will be available on this webpage.
The research will address SDG 16: Peace, Justice and Strong Institutions and SDG 17: Partnerships for the goals. Illicit financial flows hamper sustainable development by undermining institutions (SDG 16.4) and domestic revenue mobilization (SDG 17.1). The 2030 Agenda for Sustainable Development recognizes these risks and targets ‘By 2030, to significantly reduce illicit financial flows’.
This project is part of the 'Domestic Revenue Mobilization' programme.
Focal point: Finn Tarp
Project support: Jutta Stenholm
Communications: Anna Toppari
University of Copenhagen (UCPH)
Financial support from the Norwegian Agency for Development Cooperation
(Norad)
Detecting and countering illicit financial flows: Researchers' network
This paper examines how economic sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unprecedented sanctions imposed on Iran in 2012 and focus on the manufacturing sector. Employing a...
Cross-border traders face a choice between official and unofficial border crossings. The latter allow them to evade taxes, but expose them to other risks, such as bribes, fines, and arrest. We investigate the perceptions of cross-border traders about...
Offshore tax havens cause large losses of government revenue by facilitating tax evasion by wealthy individuals. This paper focuses on offshore tax evasion in developing countries and documents two empirical regularities. First, there is no clear...
This paper explores two policy interventions in Zambia, a minimum wage hike in 2018 and an upward revision in the first kink in the progressive income tax schedule in 2017, to examine and compare the impact of minimum wage and tax kink changes on...
In an environment with extensive corruption where much of the population evades paying their full taxes due, we tackle the question of optimal taxation when constituencies with conflicting objectives (the poor and the rich) push tax policy in...
We investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for...
We investigate the effect of economic sanctions on trade flows in countries sharing a border with sanctioned states. According to trade models, sanctions are expected to reduce trade flows, as they disrupt established trading routes and economic...
From profit shifting to sanction evasion, illicit financial flows divert funds away from essential poverty-fighting and infrastructure programs. A...
Illicit financial flows (IFFs) constitute a major challenge for development in low-income countries, as domestic resource mobilization is imperative for providing crucial public services. This study focuses exclusively on the economic dimension of...
Financial sanctions, which aim to economically hurt a target by restricting its access to financial assets and markets, require the ability to identify who owns an asset. Although experts have long claimed that offshore financial centres that offer...
About a decade ago, the world’s biggest economies agreed to crack down on multinational corporations’ abusive use of tax havens. This resulted in a 15...
The importance of domestic revenue mobilization and taxation for sustainable development is widely acknowledged in global development discussions, but...
This paper examines how trade sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unexpected and unprecedented trade sanctions imposed on Iran in 2012. We use a difference-in-differences...
The United Kingdom’s (UK) property markets are thought to be a common destination for corrupt and criminal assets and money laundering, with investment often through offshore shell companies. Following the Russian invasion of Ukraine in 2022, we...
Theme: 2019-23, Transforming states
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